State ex rel. Chase Resorts, Inc. v. Campbell

• Citation: 913 S.W.2d 832
• Decision Date: 14 November 1995
• Docket Number: No. 68608,68608
• Parties: STATE of Missouri, ex rel. CHASE RESORTS, INC., Relator, v. The Honorable Robert Lee CAMPBELL, Judge of the Circuit Court of the County of St. Louis, Respondent.
• Court: Missouri Court of Appeals

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913 S.W.2d 832 STATE of Missouri, ex rel. CHASE RESORTS, INC., Relator,
v.
The Honorable Robert Lee CAMPBELL, Judge of the Circuit
Court of the County of St. Louis, Respondent. No. 68608. Missouri Court of Appeals,
Eastern District,
Division Six. Nov. 14, 1995.
Motion for Rehearing and/or Transfer to
Supreme Court Denied Jan. 4, 1996.
Application to Transfer Denied
Feb. 20, 1996.

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Francis G. Slay, Mary Ann Ohms, St. Louis, for appellant.

Russell F. Watters, Robert William Cockerham, T. Michael Ward, St. Louis, for respondent.

CRAHAN, Judge.

In Chase Resorts, Inc. v. Safety Mut. Cas. Corp., 869 S.W.2d 145 (Mo.App.1993) ("Chase I"), we remanded the underlying action for a determination of the amount of legal fees incurred by Chase Resorts ("Relator") in defense of a personal injury action brought by Mr. and Mrs. Kramer (the Kramer litigation). We held that Safety Mutual Casualty Corporation ("Safety Mutual") was obligated to pay these fees pursuant to the express terms of its excess liability policy. Relator now seeks a writ of prohibition restraining Respondent from conducting a jury trial to determine the amount of fees owed by Safety Mutual and from enforcing his order requiring Relator to produce its entire legal file in the personal injury litigation sought by Safety Mutual in discovery. We order that our

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preliminary writ heretofore issued now be made absolute.

Relator owns the Lodge of the Four Seasons, which operated a marina located at the Lake of the Ozarks. In February 1984, a boat dock at the marina collapsed causing injuries to Mr. and Mrs. Kramer. The Kramers brought a personal injury claim against Relator. Relator was insured under a comprehensive general liability insurance policy issued by North-West Insurance Company and under a commercial umbrella liability policy issued by Safety Mutual. The Safety Mutual policy provided excess liability coverage over $500,000 up to a limit of $5,000,000 in excess of the underlying coverage provided by North-West.

During the pendency of the Kramer case, North-West was declared insolvent and was unable to provide the defense. After a brief time in which Relator paid for its own defense, the Missouri Property and Casualty Insurance Guaranty Association ("MIGA") provided for the defense pursuant to § 375.785.4(a), (b) RSMo. Cum.Supp.1984 (Repealed L.1989 S.B. 333 § A). A jury verdict of $700,000 for the Kramers was appealed. Kramer v. Chase Resorts, Inc., 777 S.W.2d 647 (Mo.App.1989). On remand the case was retried to determine the Kramer's percentage of fault, which was found to be zero, thus leaving the prior judgment unchanged. The judgment was satisfied through payments from Relator and Safety Mutual.

On July 30, 1990, Relator filed a declaratory judgment action seeking, among other relief, a declaration as to its right to recover legal fees and costs of $132,508.55 allegedly incurred in defense of the Kramer litigation from MIGA and Safety Mutual. Relator settled its claim against MIGA in July 1991. Respondent entered summary judgment for Safety Mutual, and Relator appealed.

On appeal, we found that "Safety Mutual's definition for 'Ultimate Net Loss' provides that 'Ultimate Net Loss' means the total sum insured becomes obligated to pay by reason of liability claims, including law costs, premiums on attachment or appeal bonds, and expenses for lawyers and for litigation.'' Chase I at 151. Based on this policy language, we held that "Safety Mutual has a duty to pay appellant's [Relator's] remaining legal fees for [the Kramer litigation]." Id. at 152. We therefore reversed the judgment in favor of Safety Mutual and remanded for a determination of the amount of legal fees incurred by Relator in the Kramer litigation.

On remand, Safety Mutual filed a demand for trial by jury on the issue of the legal fees. Safety Mutual also served a subpoena duces tecum wherein Safety Mutual sought what amounts to Relator's entire legal file on the Kramer litigation. Relator produced copies of legal bills itemized by date, services performed, hours, attorneys performing such services and amount charged, as well as spreadsheets related to the Kramer litigation. It also filed objections to the subpoena duces tecum on the grounds, among others, that Safety Mutual's request for "all other documents and records related to any and all legal services provided ..." was overbroad and called for irrelevant and immaterial information, and would require the production of documents protected by the attorney-client and work product privileges.

Safety Mutual later filed a supplemental request for production of documents followed by a motion to compel production of the documents it had subpoenaed in July 1994. The motion sought production of the entire file of counsel for Relator including the legal research file, internal memoranda, attorney notes, correspondence file, and any additional documents contained within the law firm's Kramer case file. Counsel for Relator filed suggestions in opposition to the motion to compel production of the documents, as well as a motion to strike Safety Mutual's jury demand. Following a hearing, Respondent entered an order sustaining Safety Mutual's motion to compel. Relator was ordered to produce the legal file within ten days. Respondent also indicated his intention to set the case for a jury trial. Relator then sought and obtained our preliminary writ of prohibition.

Relator maintains that Respondent has no discretion to order a jury trial to determine the reasonableness of the legal fees it incurred in defense of the Kramer litigation

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because (1) the language of the policy is absolute and thus permits no inquiry into the reasonableness of the fees incurred and, (2) even if reasonableness is in issue, the reasonableness of attorney's fees is a question of law to be determined by the court and not by a jury. We reject the former contention and sustain the latter.

Although the policy does not expressly limit Relator's reimbursement to fees reasonably incurred, "[a]n attorney is only entitled to fees which are fair and just and which adequately compensate him for his services." Terminal Railroad Ass'n of St. Louis v. Schmidt, 353 Mo. 79, 182 S.W.2d 79, 82 (1944); see also Scheufler v. Continental Life Ins. Co., 350 Mo. 886, 169 S.W.2d 359, 363 (1943). This is true no matter what fee is specified in the contract, because an attorney, as a fiduciary, cannot bind his client to pay a greater compensation for his services than the attorney would have the right to demand if no contract had been made. See Kiser v. Miller, 364 F.Supp. 1311, 1319 (D.D.C.1973) (aff'd in part, rev'd in part on other grounds, Kiser v. Huge, 517 F.2d 1237 (D.C.Cir.1974)). Therefore, as a matter of public policy, reasonableness is an implied term in every contract for attorney's fees. If Relator could not lawfully contract with its attorneys for an unreasonable fee, it follows that Relator and Safety Mutual could not lawfully contract for reimbursement of more than a reasonable fee. Thus, Relator's...